PERA SIGNED INTO LAW

The Personal Equity and Retirement Account, a supplementary private retirement plan for all public and private employees that especially targets overseas Filipino workers, was signed into law today by Malacañang.

"This is one of the best ways to accumulate savings. It will greatly augment Filipinos' retirement plan. People are generally scared of retiring, especially Filipinos, because we are not savings conscious and the pension we get from government - either SSS or GSIS - is usually inadequate for our sunset years. PERA will help retirees live more comfortably," said Senator Edgardo J. Angara, chairman of the Senate Committee on Banks and Financial Institutions.

"Filipino workers generally look at retirement with apprehension as it translates to a loss of income and the lack of retirement benefits. The absence of a dependable retirement plan - and thus the financial uncertainty that goes with it - could make retirement a source of insecurity rather than comfort," said Angara, who principally authored and sponsored the law.

He added, "PERA will address this situation and fill a void in the country's retirement scheme where a large number of working Filipinos are slipping through."

The National Statistics Office reported that the country has a labor force of about 35.81 million, representing a 64% labor participation rate. Of this, only 78% are members of government-initiated pension funds: 26.49 million for SSS and 1.4 million for GSIS.

About 8 million Filipinos have no pension or retirement savings to look forward to.

"Take, for instance, the experience of Overseas Filipino Workers who make a huge contribution to our economy in terms of foreign remittances. Their remittances provide for their families' present consumption - buying a house, paying for their kids' tuition, setting up small businesses - but leave very little savings for one's retirement," he continued.

Under the PERA bill, an individual contributor may make a total maximum annual contribution of P100,000.00 to his PERA account. The contributor shall be given an income tax credit equivalent to five percent (5%) of the total PERA contribution. Income from the contribution as well as the eventual distribution of the PERA to the contributor shall be tax-exempt. This amount is withdrawable when the contributor reaches the age of 55.